Vodafone 2023 TCFD Report

Vodafone Group Plc Task Force on Climate-related Financial Disclosures Report 2023

Overview

Risk Management

Metrics and Targets

Governance

Strategy

Building climate resilience into our business strategy Strategy is defined in the TCFD recommendations as: “an organisation’s desired future state.

opportunities in three possible future climate scenarios (in line with the reference scenarios published by the Bank of England in December 2019). The scenario analysis provided an indication of the magnitude and potential impact of each risk and opportunity and how each could materialise over different time horizons: short-term (2020-2025), medium-term (2026-2035), and long-term (2036-2050). The results (summarised in Figures 5, 6, and 7) have helped us to focus our efforts on the most important risks and to develop mitigation strategies at the Group level, as well as in our local markets where necessary. In 2022, we refreshed our climate risk assessment to incorporate the latest climate trends, science, and our own knowledge of how climate change was impacting our business. Our refreshed assessment applied updated time horizons to better align with both actionable timeframes for the key internal management processes that drive mitigation action, and the long-lived nature of some of our network assets. Short-term risks and opportunities (those that could materialise within 0-3 years) are now aligned with the time horizon of our risk management framework and our long-range business planning process; and medium-term risks (3-5 years) are aligned with the timeframes used for internal planning purposes. The long-term to very long-term time horizon (5 to 28 years) provides us with a view of climate- related risks on our long-lived infrastructure assets until 2050, in line with global targets for reaching net zero. This year, we conducted two exercises to review our climate risks and opportunities. Firstly, we conducted a scenario analysis focusing on the potential impact of physical climate-related risks on specific types of our infrastructure assets. This assessment examined the potential for physical damage to over 650 of our infrastructure assets due to extreme weather. It Identified that 6.6%-7% (depending on the scenario used) of analysed sites could be at high/ very high risk of damage from climate perils by 2050. The analysis helps us to target our risk mitigation actions to protect and adapt specific assets that are most exposed to physical climate risks. Read more on page 8 Secondly, we carried out a survey and a series of interviews to gather views of physical risks, transition risks and opportunities from our internal stakeholders across relevant functions to refresh our climate risk assessment. The exercise gauged progress in building climate resilience into our strategies and business plans across areas including energy

Figure 2 Risk and opportunity categories used in our climate risk assessment and scenario analysis

An organisation’s strategy establishes a foundation against which it can monitor and measure its progress in reaching that desired state. Strategy formulation generally involves establishing the purpose and scope of the organisation’s activities and the nature of its businesses, taking into account the risks and opportunities it faces and the environment in which it operates”. It is recommended that organisations disclose the nature and impact of their material climate-related risks and opportunities, as well as the resilience of their strategy under each climate scenario chosen. We recognise that both climate-related risks and opportunities have the potential to impact our business. We have therefore sought to take the necessary steps recommended by the TCFD to identify and assess the potential materiality of the risks and the opportunities, so we can maximise the positive impacts and minimise the negative impacts on our business. Evolving our understanding of climate-related risks and opportunities Since starting our TCFD journey in 2019, we have conducted a series of increasingly targeted analyses to identify and assess climate-related risks and opportunities over the short, medium and long term. Our initial qualitative climate risk assessment in 2019 identified 11 climate-related risks and three climate-related opportunities with potential to materially impact our business. Material risks are those that could have a significant effect on our operations, strategy and financial planning if they are not managed appropriately. Material opportunities, when taken, will improve not just our financial performance, but also reduce our impact on the planet and, in some cases, enable other organisations and individuals to reduce their impact as well. Across 2020 and 2021, we conducted a scenario analysis to assess the resilience of our business to the material climate-related risks and

Our scenario analysis approach

Category

Description

Physical risks

High-level qualitative scenario analysis (2020) High-level quantitative analysis, focused on selected infrastructure asset types in at high risk (2022-2023) High-level qualitative scenario analysis (2020)

Risks related to the physical impacts of climate change, both event driven (acute) and longer-term (chronic) shifts in climate patterns, and which may have financial implications for companies Growing external pressures and demands for action to transition to a lower-carbon economy result in changes to the regulatory or market environment, in ways that could negatively impact company costs, revenue or market share

Transition risks

Opportunities A shifting business landscape in a net zero world opens new market and investment opportunities

High-level qualitative scenario analysis (2020)

management, networks and technology, policy and regulation. Energy market volatility and extreme weather events in several of our markets (including flooding in Germany and cyclones in Mozambique) over recent years has highlighted the potential for impact on our business and strengthened our commitment to continue building resilience over time. Similarly, global supply chain disruption in recent years has illustrated how external shocks could impact our supply chain, in ways not dissimilar to longer-term global warming. As a result, we have refined the list of material climate-related risks to prioritise our efforts and identified an additional area of opportunity to exploit as shown in Figure 4.